Kings Rehabilitation Center Inc. v. Premo

KINGS REHABILITATION CENTER, INC., Plaintiff and Appellant, v. BRENDA PREMO, as DIRECTOR, etc., Defendant and Respondent. No. C027852 (Super. Ct. No. 97SC00662) California Court of Appeal Third Appellate District (Sacramento) Filed January 13, 1999 CERTIFIED FOR PARTIAL PUBLICATION*         APPEAL from a judgment of the Superior Court of Sacramento County. Cecily Bond, Judge. Affirmed.
        David Rosenberg and Chad Carlock for Plaintiff and         Appellant.
        Eisen & Johnston, Jay-Allen Eisen and Marian M. Johnston, for California Rehabilitation Association as amici curiae on         behalf of Plaintiff and Appellant.
        Daniel E. Lungren, Attorney General, Charlton G. Holland, III, Senior Assistant Attorney General, Frank S. Furtek and
        Mateo Munoz, Deputy Attorneys General, for Defendant and         Respondent.

        In this dispute over cuts to reimbursement rates, plaintiff Kings Rehabilitation Center, Inc. (Kings) appeals from a judgment denying its petition for writ of mandate and declaratory relief. In the published portion of this opinion we uphold the practice of "incorporation by reference" of materials into published regulations. We address other points in the unpublished portion of the opinion. We shall affirm.

[THIS PART IS NOT CERTIFIED FOR PUBLICATION]
BACKGROUND         The Department of Rehabilitation (the Department) administers a variety of programs, including "habilitation" programs. (Welf. & Inst. Code, § 19350 et seq.; further unspecified references are to this code.) The particular program at issue is designed to train adults who have "developmental disabilities," generally, mental retardation, to enter the workforce. (See Association for Retarded Citizens v. Department of Developmental Services (1985) 38 Cal.3d 384, 388-389, fns. 2-3.) Various entities provide services, including "work-activity programs" and may claim reimbursement for the reasonable costs of such services from the Department. (See §§ 19352, subd. (e); 19355.)
        By regulation, "[t]he ratesetting procedure begins by developing a historical rate, which is defined as the total reasonable . . . costs in the historical period divided by the total days or hours of attendance of . . . clients." (Cal. Code Regs., tit. 9, § 7339, subd. (a).) The procedure results in a daily, per client rate. (Cal. Code Regs., tit. 9, § 7339, subd. (c).)
        In 1979, section 19356 was enacted. Subdivision (a) of that section requires the Department to adopt regulations to provide "for an equitable ratesetting procedure" to determine the "reasonable cost of service." In 1983, the Department issued the "Habilitation Services Ratesetting Manual" (Manual), which defined three categories of providers, grouped by size of clientele, small (0 to 30), medium (31 to 100) and large (over 100). Each facility submits a cost statement. The Department calculates the gross rate, then fixes the mean and standard deviation for each size category. "The mean plus one standard deviation shall be the maximum allowable [rate] for each grouping for the payment year." A facility which claims actual costs exceeding the mean plus one standard deviation will have its rate "capped" accordingly.
        In 1988, the Legislature amended section 19356, so that subdivision (b) set forth a detailed rate system which included three size categories, as did the Manual, namely, 0 to 30 clients, 31 to 100 clients, and over 100 clients. A fourth category, all facilities serving a specified type of client, is not relevant to this case. The subdivision set forth various computations and specified the provider should be paid at "the highest" of three options (former § 19356, subd. (b)(3); Stats. 1988, ch. 237, § 7, p. 869), one of which was 95 percent of the provider's cost statement (id., subd. (b)(3)(B)(i)).
        This system supplanted the method employed under the Manual. In theory, if all facilities had extremely similar costs, all would be compensated at or near 100 percent under the Manual, because the mean plus one standard deviation would encompass most, if not all, of the claimed individual actual costs. But in practice, the individual actual costs would be likely to vary widely, in which case the statutory system would be more generous to the group as a whole than the Manual, because no facility would get less than 95 percent of actual costs.
        Former subdivision (b) was "sunsetted" and would become inoperative on July 1, 1993, later extended to July 1, 1996. (Former § 19356, subd. (b)(7); Stats. 1988, ch. 237, § 7, p. 870; Stats. 1991, ch. 694, § 14, p. 3121.)
        In the 1996 Budget Act, signed on July 15, 1996, the line item for Habilitation Services reflects a budget of $80,510,000. (Stats. 1996, ch. 162, § 2, p. __.) The Governor reduced this by $3,365,000 to $77,145,000, stating the reduction "would fund projected increased costs for Habilitation Services providers. After the reduction, funding remains for a discretionary rate increase equivalent to seven percent of existing base funding." (Governor's Veto Message to Sen. Bill No. 1393, Stats. 1996, ch. 162, p. __.) However, the Governor later signed an urgency bill effective on July 22, 1996, a legislative "trailer" to the Budget Act, which relates to various "social services" programs, including AFDC, Food Stamps, In-Home Supportive Services and so forth. It contains two provisions relevant to habilitation services rates, as follows:
        First, the Legislature adopted a new section 19355.5, which required a proportionate reduction in rates, which is discussed in part II, infra. (Stats. 1996, ch. 206, § 36, p. __.) The former section 19355.5, adopted in 1992 and amended several times (see Stats. 1992, ch. 1368, § 1, p. 6860 & Deering's Ann. Welf. & Inst. Code, notes foll. § 19355.5, West's Ann. Welf. & Inst. Code, Historical and Statutory Notes foll. § 19355.5), had established a "freeze" on rates which, by the terms of the former statute, remained in effect only until July 1, 1996.
        Second, the Legislature adopted a new subdivision (b) to section 19356: "It is the intent of the Legislature that, commencing July 1, 1996, the department establish rates for both habilitation services and vocational rehabilitation work-activity programs pursuant to subdivision (a). Nothing in this subdivision shall preclude the subsequent amendment or adoption of regulations pursuant to subdivision (a)." (Stats. 1996, ch. 206, § 37, p. __.) The size caps and rate system contained in the sunsetted version of the statute were not reinstated.
        The Department reverted to the Manual it had used prior to adoption of the "supplanting" legislation. Although other portions were changed, the size caps provided by section 3450 of the Manual were not changed.
        For the period beginning with fiscal year 1996, Kings claimed historical costs of $50.98 per client per day. Kings is a "medium" facility, for which the cap had been set at $37.13. (Small facilities were capped at $56.73 and large facilities were capped at $29.10.) The Department reduced the capped rate by seven percent, based on its implementation of the proportionate reduction provision of the trailer bill. It has paid and continues to pay Kings at the rate of $34.53.
        Kings protested, exhausted its administrative appeals and filed this suit. Kings seeks a writ of mandate compelling the Department to pay it more money, either its claimed actual costs, or only seven percent off the claimed costs, rather than off the capped costs, or by only cutting the rate by about four percent, instead of seven percent; Kings also seeks a declaration that the Manual is an underground regulation and is therefore unenforceable. The trial court rejected these claims and Kings timely filed its notice of appeal.

DISCUSSION I.         Kings maintains the use of rate caps based on facility size is precluded by legislation. We disagree.
        The Department came up with its facility size cap on its own, by administrative regulation. The Legislature later supplanted the regulation with a statute, which also used facility size caps. The Legislature allowed the statute to expire by its own terms, then adopted a new statute to permit the Department to set rates, a power it had previously exercised. We do not share the view that this course of events represents a legislative bar to the use of facility size caps.
        It is true that the Legislature repealed the payment method it had created, one component of which set facility size caps. But had the Legislature intended to forbid the Department from using size caps it would have said so.
        The fact that the Legislature also stated, in the post-sunset section 19356, subdivision (b), that "[n]othing in this subdivision shall preclude the subsequent amendment or adoption of regulations pursuant to subdivision (a)" (Stats. 1996, ch. 206, § 37, p. __), does not mean, as Kings assumes, that the Legislature thereby meant that only future regulations would be valid. Kings states, "The Legislature intended to eliminate the previous system of size categories and caps, and was 'inviting' (i.e., politely instructing) the Department to develop a new regulatory scheme to fill the void." But the Legislature spoke of amendments, which means it was aware of the existing regulations, as Kings concedes. Kings is mistaken when it chastises the Attorney General for pointing out, correctly, that the Legislature was presumptively aware of the existing Manual, and that with the end of the statutory scheme the Department would, or at the very least might, apply the earlier scheme contained therein. What other scheme could the Department apply? The Legislature could foresee that the Department would use the Manual indefinitely or until it adopted new procedures. The Legislature could have prevented this by explicit statutory command. It did not.
        Kings states, "If the Legislature approved of the continued use of size categories, it would not have changed [subdivision] (b) to delete the use of size categories." (Original emphasis.) Not so. The Legislature freed the Department from the strictures of former subdivision (b) and reentrusted to the Department the task of creating a fair system for reimbursement. The Department was not barred from using size categories; it was liberated from the requirement to use them.
        Kings states the Legislature wanted to change the system. The system did change. The former statutory system was replaced by the earlier administrative system, which functioned differently. Although both systems categorized the facilities by size, the two systems applied very different calculations.
        Kings wants all of the existing regulations invalidated so that the only figure the Department will have is the costs actually claimed by Kings. However, the legislation did not have that effect. All the Legislature did was allow the expiration of a statute which had supplanted an administrative size cap system with a statutory size cap system. The demise of that statute did not express legislative hostility toward size caps.
        Kings repeatedly implies that a "reasonable" rate is one actually incurred by a facility acting reasonably, with fiscal prudence. Therefore, since Kings believes its historical cost figure is accurate and was the result of "reasonable" conduct of the facility, that is the amount it should be paid, and any usage of size caps is unreasonable. We disagree. The Legislative command that a reasonable rate be achieved encompasses more than mere "good faith" by a provider. A "reasonable" rate encompasses reasonable conduct by the providers and the "reasonable" efficacy of the program as a whole. Some providers who act reasonably may find their efforts are not in line with overall fiscal goals of the program. That does not make the result "unreasonable."
        References to various legislative floor analyses are unavailing. Assuming resort to extrinsic sources of legislative "intent," as opposed to legislative history, is ever appropriate (but see United States v. Estate of Romani (1998) 523 U.S. __, __ [140 L.Ed.2d 710, 726-727] (conc. opn. of Scalia, J.)), it is appropriate when and only when a statutory ambiguity is raised, meaning a circumstance in which two plausible candidates of construction of a statute are proffered. (See Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 776.) Kings does not identify what portion of any statute is ambiguous. Further, floor analyses reflect the views of legislative staffers working for a particular committee or legislator. We do not review the motives of individual lawmakers or subgroups of lawmakers and the collective motives of the Legislature are reflected in the words of statutes and not elsewhere. (People v. Knowles (1950) 35 Cal.2d 175, 182; see Fletcher v. Peck (1810) 10 U.S. (6 Cranch) 87, 130 [3 L.Ed. 162, 176].)
        The suggestion that when the new version of section 19355.5 was passed, the Legislature "could not have known" that the Governor would reduce the Budget Act expenditures goes nowhere. The Legislature is aware of the Governor's line-item veto powers.
        Kings contends the use of size and rate caps is unlawful absent express legislative authorization. This is incorrect. The Legislature commanded the Department to establish an equitable ratesetting procedure. The Legislature neither compelled nor forbade the use of rate caps. The fact that the Legislature did not specifically command the manner in which the ratesetting procedure must be structured does not detract from the fact that the Legislature directed the Department to establish some sort of fair procedure. Kings states "it is inherently and inevitably inequitable to place an absolute cap on rates, regardless of the actual cost to the provider." On the contrary, it is appropriate for the Department to weed out inefficient providers, to spend the money on more efficient providers, and thereby better use the taxpayer's money and better serve needful clients. The Department could determine that beyond a certain dollar amount, it was infeasible to continue paying some providers.
        A case cited by Kings is pertinent to this last point. In California Assn. of Nursing Homes etc., Inc. v. Williams (1970) 4 Cal.App.3d 800, this court reviewed the propriety of a regulation setting standards for payment of certain Medi-Cal providers. A group of providers claimed the regulation forced them to operate at a loss. (Id. at pp. 805-806.) Statutes required reimbursement for reasonable costs, but allowed the agency to limit rates of payment. (Former §§ 14104 & 14105, quoted id. at pp. 806-807, fns. 3-4.) The providers filed an administrative petition challenging the rates on the ground that they were not reasonable. (Id. at p. 809.) After the petition was impliedly rejected, the providers sued. We found the challenged rate regulations were not properly adopted and proceeded to "consider the effect of that failure." (Id. at p. 816.) We found that the relevant statutes did not amount to a contractual offer of payment of a "reasonable cost," and that "administrative implementation is indispensable to the creation of financial claims in specific amounts." (Id. at pp. 817-818.) "Petitioner seeks to have rates for past and future care measured by the reasonable cost yardstick, free or virtually free of fiscal restrictions. The statutes, to the contrary, bespeak a legislative response not only to medical needs and the quality of medical care, but also to the promptings of fiscal economy. . . . These financial limitations, springing from sources outside the Medi-Cal law itself, are entitled to concurrent operation with it. [Citations.]" (Id. at p. 819.) One of the limitations referred to was the annual appropriations for health services. There, as here, "reasonable cost" implicates factors outside the control of the provider, such as the size of the relevant budget.
        The only argument Kings provides to the effect that as applied to Kings, the use of rate caps is unfair, is the claim that were Kings to serve fewer clients, it would make more money. Had Kings but 30 clients, and qualified as a "small" facility, it would have been reimbursed at a higher per client daily rate, namely, the lower of its historical costs or the "cap" for a small facility, which is now $56.73. Kings assumes it would have been given its full claimed cost of $50.98 per client per day, or $1,529.40. Instead, with 40 clients, the unadjusted cap rate of $37.13 yields a total of $1,485.20. The first flaw in this argument is that Kings, if reduced to a "small" facility, might end up with a much higher historical cost than $50.98, because many of its costs are no doubt fixed. Therefore, it might still (from its point of view) "lose" money. Second, Kings provides no argument about other factors which may have influenced the Department to be more generous with smaller facilities. It appears Kings is making some sort of equal protection claim (for which no authority is cited in the brief), that the classification of small, medium and large is arbitrary and bears no relationship to the costs of running such facilities. "Wide discretion is vested in the Legislature in making the classification and every presumption is in favor of the validity of the statute; the decision of the Legislature as to what is a sufficient distinction to warrant the classification will not be overthrown by the courts unless it is palpably arbitrary and beyond rational doubt erroneous." (Sacramento M. U. Dist. v. P. G. & E. Co. (1942) 20 Cal.2d 684, 693.) Here, the Department, the body entrusted to make the classification at issue, could have determined that there was or should be an increased cost savings related to the increased size of the average facility, and therefore it was rational to pay small facilities (as defined) more per client than was paid to medium or large facilities.
        In the course of discussing this claim, Kings states that the Department failed to tender to the trial court supporting evidence of the reasonableness of the caps or classifications. "But States are not required to convince the courts of the correctness of their legislative judgments. Rather, 'those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker.' [Citations.]" (Minnesota v. Clover Leaf Creamery Co. (1981) 449 U.S. 456, 464 [66 L.Ed.2d 659, 668-669] fn. omitted.) So, too, here.

II. The Seven-Percent Solution.         Kings challenges the sufficiency of the evidence to support the Department's decision to impose a further seven percent cut to the rates. Kings challenges the seven percent figure and the manner in which the seven percent figure was applied to Kings.
        As mentioned above, in a trailer bill to the 1996 Budget Act, the Legislature adopted a new section 19355.5. It provides that "effective July 1, 1996, all rates established for the 1996-97 fiscal year pursuant to Section 19356 under this chapter for work-activity programs shall be reduced proportionately if necessary by the percentage necessary to ensure that projected total General Fund expenditures for the habilitation services and vocational rehabilitation work activity and supported employment programs based on Budget Act caseload projections do not exceed the General Fund appropriations for these programs in the Budget Act of 1996." (Stats. 1996, ch. 206, § 36, p. __.)
        The Department calculated the necessary reduction, which came to about six and one-half percent. This figure was rounded to seven percent to ensure that the General Fund appropriation would not be exceeded. How the Department got to the figure of six and one-half percent is detailed in the "Martin" declaration. Although the calculations are complex, the trial court found they were not arbitrary.
        We need not set the formula out in full in this opinion, because rather than trying to explain the formula and attack it by reasoned argument, Kings simply denigrates it as "a Rube-Goldbergian 16-step process," "painfully convoluted," and, in the reply brief, "over five pages of mathematical gymnastics." Complexity, without more, does not make the formula arbitrary. For failure to set forth the material details of the process, the general challenge to the calculations is waived. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) That the facts are purportedly complex does not excuse an appellant from explaining them; indeed, such circumstance requires greater attention to the facts, to assist the appellate court in understanding them. (See Akins v. State of California (1998) 61 Cal.App.4th 1, 17, fn. 9.)
        In effect, Kings, in its briefs, challenges the Department to prove the calculations are reasonable. But Kings is the appellant. "Instead of a fair and sincere effort to show that the trial court was wrong, appellant's brief is a mere challenge to respondents to prove that the court was right. And it is an attempt to place upon the court the burden of discovering without assistance from appellant any weakness in the arguments of the respondents. An appellant is not permitted to evade or shift his responsibility in this manner." (Estate of Palmer (1956) 145 Cal.App.2d 428, 431.)
        Kings does mention that the total shortfall to the Department was 4.2 percent, that the Martin calculations "resulted in 'a 5.9% reduction of work activity program rates[,]'" and the declaration mentions "a mysterious 'further reduction' due to a purported additional deficiency of $550,000 which was totally unexplained and unsupported." We disagree that the deficiency "was totally unexplained and unsupported." The declaration averred, factually, that there was a budgetary deficiency of $550,000. In a footnote, Kings states the averment "is both an opinion and totally unsupported by any factual explanation in the record of why the appropriation was supposedly deficient. It cannot be the basis for a finding." (Original emphasis.) Kings fails to explain whether or when it lodged these objections in the trial court, accordingly it may not raise them here. (Evid. Code, § 353; People v. Morris (1991) 53 Cal.3d 152, 187-188 [waiver].) Further, this argument is not separately headed. (Cal. Rules of Court, rule 15(a); Landa v. Steinberg (1932) 126 Cal.App. 324, 325 [waived].) Finally, Kings tenders no meaningful explanation why the opinion, if it be such, is entitled to no weight. (Diamond Springs Lime Co. v. American River Constructors (1971) 16 Cal.App.3d 581, 608 [waived].)
        The only aspect of the 16-step process explained and attacked, albeit with virtually no analysis, is the last step, where the six and one-half percent result was "rounded" to seven percent. According to the Martin declaration, the rounding was done for fiscal prudence: "to ensure that projected expenditures did not exceed the General Fund appropriation[.]" The Budget Act is, in large measure, dependent on projections. Some of these are relatively certain; others depend on events outside the realm of mortal prediction, such as worldwide economic changes. The Attorney General states, and Kings does not dispute, that the "rounding" made a difference of about $300,000 to the work-activity portion of the Department's budget, which was about $60,000,000. We cannot say that the size of this "cushion," one-half of one percent, was arbitrary or irrational. Kings bore the burden to demonstrate the rate was irrational, and Kings has not made any effort to meet its burden.
        Kings makes reference to certain documents as to which judicial notice is sought. Kings fails to show whether these materials were tendered to the trial court, therefore we deny the request for judicial notice. (People v. Preslie (1977) 70 Cal.App.3d 486, 493.) In any event, the import of the materials is that some providers received an increase by use of the new procedure and some received a decrease. Further, some, which were at or below the rate caps, were only "cut" by the seven percent cut, while others, such as Kings, had claimed costs "reduced" to the caps, then reduced by seven percent. This seems to be another veiled iteration of the view that it is somehow entitled to be paid what it claims its actual costs are. Thus Kings states it had its "rates reduced by the rate caps, then reduced an additional 7%." This is not correct. No "rates" were reduced by the rate caps. The rate caps are applied to the claimed actual costs, of which Kings has no vested right to be paid: An "equitable" rate does not compel payment of claimed actual costs, as Kings repeatedly states or implies. The application of the seven percent reduction to the rate caps, rather than the claimed actual costs, is not arbitrary or inequitable. All that is required is that the procedure be rational, and that it be applied evenhandedly to all providers. (Hope Rehabilitation Services v. Department of Rehabilitation (1989) 212 Cal.App.3d 938, 949-950.) All providers are limited to the capped rates, then reduced seven percent. Nor can Kings complain of the purported impairment of the "rights" of the clients to services mandated by the Legislature: That is an issue arising between the clients and the state. (Id. at p. 944.) If Kings is unhappy with the reimbursement rate, it should try to reduce its costs, which, it seems, well exceed the average (plus one standard deviation) for facilities of its size.

[END OF PART NOT CERTIFIED FOR PUBLICATION]
III. Incorporation by Reference.         The Department of Rehabilitation administers "habilitation" programs and reimburses providers of "work-activity programs," among others. (See Welf. & Inst. Code, §§ 19350, 19352, subd. (e), 19355.) In aid of its mission, the Department issued a ratesetting manual, the Habilitation Services Ratesetting Manual, which includes formulas for reimbursing providers. The Manual has not, itself, been promulgated as a published regulation. Kings maintains that the ratesetting Manual is an illegal "underground regulation" in violation of the Administrative Procedures Act (Gov. Code, § 11340 et seq. (APA)). Kings makes a facial attack on the process of incorporation by reference, which it views as antithetical to the letter and spirit of the APA. We reject the claim.
        The APA is partly designed to eliminate the use of "underground" regulations; rules which only the government knows about. If a policy or procedure falls within the definition of a "regulation" within the meaning of the APA, the promulgating agency must comply with the procedures for formalizing such regulation, which include public notice and approval by the Office of Administrative Law (OAL). Failure to comply with the APA nullifies the rule. (Gov. Code, § 11350, subd. (a), Armistead v. State Personnel Board (1978) 22 Cal.3d 198, 204.)
        The Department adopted a regulation as follows: "The Habilitation Services Ratesetting Manual dated July 1, 1983, and revised July, 1996 (hereinafter called 'the Ratesetting Manual') is regulations as defined by Government Code Section 11342 [subdivision] (g), and is hereby incorporated by reference and made a part of these regulations. Persons desiring copies . . . may purchase them from [the Department of General Services] at a price covering the cost of printing." (Cal. Code Regs., tit. 9, § 7337.) Kings challenges the use of incorporated material, not the process by which the regulation was adopted.
        OAL is given the broad authority to "adopt, amend, or repeal regulations for the purpose of carrying out" the APA. (Gov. Code, § 11342.4.) A regulation promulgated by OAL, set forth in full in the appendix, states in part: "Where a regulation which incorporates a document by reference is approved by OAL and filed with the Secretary of State, the document so incorporated shall be deemed to be a regulation subject to all provisions of the APA." (Cal. Code Regs., tit. 1, § 20, subd. (e).)
        The OAL regulation is not a statute, but it is a regulation approving the practice of incorporation by reference and it was promulgated by the very agency which regulates regulations. It is entitled to deference. (Whitcomb Hotel, Inc. v. Cal. Emp. Com. (1944) 24 Cal.2d 753, 756-757.)
        The fact that no statute explicitly authorizes the practice of incorporation by reference does not mean it is illegal; no statute specifically forbids the practice, either. Further, at least one statute assumes the practice is lawful. Government Code section 11344.6 provides in relevant part that: "The courts shall take judicial notice of the contents of each regulation which is printed or which is incorporated by appropriate reference into the California Code of Regulations as compiled by the office." There is no reason to judicially notice illegal regulations, therefore we assume the Legislature has agreed with OAL's determination that incorporation by reference can, in some cases, further the purposes of the APA. Kings points to the use of the word "appropriate" as a qualifier. Kings fails to explain how the manner of incorporation herein was "inappropriate," and does not refute the import of this statute, which is that the Legislature expects some regulations will be incorporated by reference.
        We disagree with the claim that the practice does not "carry out the provisions" of the APA within the meaning of Government Code section 11342.4. There is nothing "underground" or covert about the process, as employed herein. Anybody who wants to learn about ratesetting under this program can consult the Code of Regulations index, find the regulation at issue, then write to the address listed and obtain a copy of the Manual at the cost of printing.
        Kings complains that members of the public must purchase the manual. This unheaded argument is in a footnote (Cal. Rules of Court, rule 15(a) Landa v. Steinberg, supra, 126 Cal.App. 324, 325 [waived]), no authority or analysis is given (Diamond Springs Lime Co. v. American River Constructors, supra, 16 Cal.App.3d 581, 608 [waived]) and, as stated above, Kings has launched a facial challenge to the regulation. Kings states that the Department sends the Manual to service providers.
        There are many agencies which of necessity establish comprehensive manuals, technical standards and so forth, often of interest to only a select few. The thousands, if not hundreds of thousands, of pages represented by these manuals would only further deluge the subscribers to the Code of Regulations, with no benefit to them or the public at large. Material may be incorporated by reference only if "it would be cumbersome, unduly expensive, or otherwise impractical to publish the document in the California Code of Regulations." (Cal. Code Regs., tit. 1, § 20, subd. (c)(1).) That reflects good sense.
        There is no evidence that the practice of incorporation by reference has been or can be used to "hide" a regulation. OAL exercizes its function to scrutinize proposed regulations and sometimes rejects them when the rules regarding incorporation of material by reference are not followed. (See, e.g., Fellmeth, The PUC's Electricity Deregulation Proposals: Point/Counterpoint (Spring/Summer 1995) 15 Cal. Reg. L. Rptr., p. 19 [failure to incorporate necessary form]; (Winter 1995) 15 Cal. Reg. L. Rptr., p. 114 [disapproval of incorporation of statistical analysis plan]; (Fall 1994) 14 Cal. Reg. L. Rptr., p. 42 [failure to identify incorporated forms]; (Winter 1994) 14 Cal. Reg. L. Rptr., p. 102 [failure to properly incorporate plan]; cf. (Winter 1994) 14 Cal. Reg. L. Rptr., p. 140 [approval of incorporation of technical standards].) Thus, OAL exercises appropriate control over the practice.
        In further answer to the view that "incorporation by reference" is antithetical to the concept of published regulations, we observe that the federal analog to the APA explicitly endorses the practice: "Except to the extent that a person has actual and timely notice of the terms thereof, a person may not in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published. For the purpose of this paragraph, matter reasonably available to the class of persons affected thereby is deemed published in the Federal Register when incorporated by reference therein with the approval of the Director of the Federal Register." (5 U.S.C.A. § 552(a)(1); see 1 C.F.R. §§ 51.1 et seq.; see also, e.g., National Ass'n of Con. Vets. v. Secretary of Defense (D.D.C. 1979) 487 F.Supp. 192, 201 ["the Navy currently makes these guidelines publicly available; it also incorporates them, by reference, in published regulations"].) We recognize that there is no similar explicit statute in the California APA, but the point is that the process of incorporation by reference is not inherently inimical.
        Kings contends that the Manual, if properly incorporated by reference, must be frozen as of the stated date, namely July 1996. Kings alleges that revisions to the Manual have been made. This would present an "as applied" challenge, which Kings disavows. Further, the only support cited is a document entitled "Fiscal Year 1996/97 Budget Impact Work Activity and Related Group SE Rates" which the Attorney General correctly points out is not a revision to the Manual but an internal memorandum describing the proposed implementation of the 1996-97 Budget Act.
        Finally, Kings asserts, correctly, that the Department can change the Manual and "reincorporate" the Manual by means of a new regulation. We fail to see what this adds to the issue, because we find the practice of incorporation by reference to be lawful. One would find the new regulation and obtain the new Manual as easily as the old. Were the Department to change the Manual absent proper procedures, that would present a different issue. (See Olive Proration etc. Com. v. Agri. etc. Com. (1941) 17 Cal.2d 204, 209-210.)

DISPOSITION         The judgment is affirmed.


We concur:
        SCOTLAND, P.J.
        BLEASE, J.


APPENDIX
        Title 1, section 20 of the California Code of Regulations provides in full:

        "(a) 'Incorporation by reference' means the method whereby a regulation printed in the California Code of Regulations makes provisions of another document part of that regulation by reference to the other document.

        "(b) Material proposed for 'incorporation by reference' shall be reviewed in accordance with procedures and standards for a regulation published in the California Code of Regulations. Except as otherwise specified in section 11 of these regulations, OAL shall not review material proposed for 'incorporation by reference' for compliance with the applicable standards of Government Code section 11349.1 when a California statute or other applicable law specifically requires the adoption or enforcement of the incorporated material by the rulemaking agency.

        "(c) An agency may 'incorporate by reference' only if the following conditions are met:

        "(1) The agency demonstrates in the final statement of reasons that it would be cumbersome, unduly expensive, or otherwise impractical to publish the document in the California Code of Regulations.

        "(2) The agency demonstrates in the final statement of reasons that the document was made available upon request directly from the agency, or was reasonably available to the affected public from a commonly known or specified source. In cases where the document was not available from a commonly known source and could not be obtained from the agency, the regulation shall specify how a copy of the document may be obtained.

        "(3) The informative digest in the notice of proposed action clearly identifies the document to be incorporated by title and date of publication or issuance. If, in accordance with Government Code section 11346.8(c), the agency changes the originally proposed regulatory action or informative digest to include the incorporation of a document by reference, the document shall be clearly identified by title and date of publication or issuance in the notice required by section 44 of these regulations.

        "(4) The regulation text states that the document is incorporated by reference and identifies the document by title and date of publication or issuance. Where an authorizing California statute or other applicable law requires the adoption or enforcement of the incorporated provisions of the document as well as any subsequent amendments thereto, no specific date is required.

        "(5) The regulation text specifies which portions of the document are being incorporated by reference.

        "(d) If the document is a formal publication reasonably available from a commonly known or identified source, the agency need not provide six duplicate copies of the document under Government Code section 11343(c).

        "(e) Where a regulation which incorporates a document by reference is approved by OAL and filed with the Secretary of State, the document so incorporated shall be deemed to be a regulation subject to all provisions of the APA."


* Pursuant to California Rules of Court, rule 976.1, this opinion is certified for publication with the exception of the Background and parts I and II of the Discussion.